ESTONIAN OIL SHALE INDUSTRY YEARBOOK 2015 · 2017. 7. 19. · YEARBOOK 2015. The yearbook of the...

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ESTONIAN OIL SHALE INDUSTRY

YEARBOOK 2015

The yearbook of the Estonian oil shale industry was issued by:

EESTI ENERGIALelle 22, 11318 Tallinn Phone: +372 715 2222 E-mail: [email protected]

VIRU KEEMIA GRUPPJärveküla tee 14, 30328 Kohtla-Järve, Ida-VirumaaPhone: +372 334 2701E-mail: [email protected]

KIVIÕLI KEEMIATÖÖSTUSTuru 3, 43125 Kiviõli, Ida-Virumaa Phone: +372 685 0534E-mail: [email protected]

THE OIL SHALE COMPETENCE CENTRE AT THE TALLINN UNIVERSITY OF TECHNOLOGY’S VIRUMAA COLLEGE Järveküla tee 75, 30322 Kohtla-Järve, Ida-VirumaaPhone: +372 332 5479E-mail: [email protected]

Texts: Eesti Energia (EE), Viru Keemia Grupp (VKG), Kiviõli Keemiatööstus (KKT), The Oil Shale Competence Centre at the Tallinn Univer-sity of Technology’s Virumaa College (PKK) ja KPMS (www.kpms.ee)

Design: Kristjan Jung

Photos:

Cover Oil shale plant in Kohtla-Järve in the 1950s (Paul Pere)

p. 6 Kukruse mine in 1919 or 1920 (Museum of Oil Shale)

p. 10 Workers in Kukruse mine in the 1920s (Museum of Oil Shale)

p. 16 Shale gasoline station inVirumaa in the 1930s (Museum of Oil Shale)

p. 28 Kiviõli ash mountain in the 1930s (Kiviõli Keemiatööstus)

p. 36 A laboratory at the Oil Shale Research Institute in 1967 (Museum of Oil Shale)

This book is published with the support of:

European UnionEuropean Structural

and Investment Funds

Investingin your future

ESTONIAN OIL SHALE INDUSTRY

YEARBOOK 2015

Statements from heads of companies and organizations in the oil shale industry . . . . . . . . 4

ESTONIAN OIL SHALE 100A century of oil shale industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ROLE OF THE OIL SHALE INDUSTRY IN THE ECONOMYState revenue from the oil shale industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Competitiveness of the oil shale industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13A new and better framework for activity in Estonia . . . . . . . . . . . . . . . . . . . . . . . . 14European Union climate policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

OIL SHALE VALUE CHAIN: FROM MINING TO FINISHED PRODUCTMining permits and volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Use of oil shale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Liquid fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Heat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Fine chemical industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Uses for by-products of the energy generation process . . . . . . . . . . . . . . . . . . . . . . 26

OIL SHALE INDUSTRY AND THE ENVIRONMENTinvestments into the environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Environmental impacts associated with mining . . . . . . . . . . . . . . . . . . . . . . . . . . 31Restoring the landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Emissions into ambient air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Water and the oil shale industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

OIL SHALE AND ESTONIAN SOCIETYHow the oil shale industry contributes to Estonian society . . . . . . . . . . . . . . . . . . . 38Supporting education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Supporting innovation and knowledge export . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Giving back to the community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Income into thestate treasury EUR

120million

Totalinvestments EUR

199million

Investments into the environment EUR

82million

Sales revenueEUR

669million

Positionsfor

7411people


312million


266million


43million

Sales revenueEUR

933million

Positionsfor

7774people

Estonian oil shale industry in 2015


4

Statements from heads of companies and organiza-

tions in the oil shale industry

In 2015, Eesti Energia completed large-scale envi-

ronmental investments to bring all power plants into

conformity with the more stringent environmental

requirements due to enter into force in 2016. The oil

shale industry will not stand in the way of meeting cli-

mate objectives – up to 2050, it will be possible to meet

all targets set for Estonia in a manner that preserves the

role of the oil shale industry in the Estonian economy.

In 2015, market conditions put energy producers to

the test. In spite of record low energy prices, oil shale

companies managed to remain competitive and con-

tributed EUR 120 million to the state budget. While

we can’t influence prices on the world energy markets,

we can find solutions to increase efficacy and make

smarter choices.

The state did its part to support the efforts of the oil

shale sector to adjust to the extraordinary market

conditions by reviewing the regulations on environ-

mental charges. The charges for use of oil shale were

temporarily lowered and the goal was set to link the

system of environmental charges to the market by

2018. These decisions create the precondition for the

oil shale industry to be able to earn income for the

state in the future as well.

The oil shale industry is cleaner than ever before

Hando Sutter chairman of the

management board of Eesti Energia

Despite the reversal of fortunes on the oil market,

2015 was a very successful year for VKG in terms of

development of production. Plants consistently oper-

ated above their rated capacity, allowing the group

to produce 560,000 tonnes of shale oil products and

maintain second place among producers worldwide.

The Petroter III plant made an important contribu-

tion to this result, achieving its maximum production

regime just a week after its launch. The project is the

largest private sector investment in Estonia in recent

years. With the Petroter plants, we have proven yet

again that the oil shale sector in Estonia remains com-

petitive and is highly efficient and environmentally

friendly even under the new climate policy conditions.

2016 is an anniversary year for the oil shale indus-

try across the country. Exactly a hundred years ago,

oil shale mining in Estonia and research into the

energy potential of oil shale started. Today this min-

eral is one of the country’s most important natural

resources, and mining operations mean jobs for thou-

sands of people, fund a substantial part of the state

budget and serves as the linchpin of our energy inde-

pendence. For that reason, I hope very much that the

oil shale industry in Estonia has many more banner

years ahead of it.

Congratulating the oil shale industry on a great year

Ahti Asmann chairman of the

management board of Viru Keemia Grupp (VKG)

5

The entire oil shale sector is undergoing complicated

times. In early 2016, world oil prices were the lowest they

have been since Estonia joined the European Union.

The downtrend put one of Estonia’s biggest export-

ing industries in a difficult position where it has to

ensure the same level of tax revenue for the state even

with the income tax rate dropping incrementally over

time, keep up with the constant salary increases and

also continue its environmental investments to meet

the European Union’s climate goals.

Thousands of employees are performing small mir-

acles every day to make all of the above happen. I

believe that in cooperation with the state, the Esto-

nian oil shale industry can survive these difficult

times and find new energy to become more efficient

and a more modern industry while providing jobs to

tens of thousands of people in Estonia and serving

as part of the bedrock of Estonian export. In doing

so, we ensure that the Estonian oil shale industry

will have reached a new level of development where

the old practice of “stoking the stoves with rock” will

have transformed a modern chemical industry that

supplies sophisticated chemical products for devel-

oping the technologies of tomorrow.

With the state, we can take the oil shale industry to a new level

Marti Hääl chairman of the

supervisory board of Kiviõli Keemiatööstus

(KKT)

We have become used to taking oil shale’s role in

Estonian society for granted, to the point where we

don’t think about the multifaceted ways we relate to

it. Or we assume that everything is just fine. But at

a time when voices proclaiming the demise of the

industry and exhaustion of reserves are becoming

ever louder, all facets have to be examined neutrally

and fairly. It seems that all of the sins are being

visited upon at least a couple generations of cur-

rent entrepreneurs, who have invested hundreds

of millions of euros into making production more

environmentally friendly and eliminating residual

pollution.

All of the investments, including into developing tech-

nologies, ultimately serve one goal – to ensure the

sustainability of the oil shale industry. It’s important

for society as a whole, as thriving oil shale sector com-

panies will ensure maximum value for our common

national resource is maximized, providing security

for thousands of jobs and preserving Estonian energy

independence. These are goals that require constructive

cooperation from all parties to create balanced develop-

ment strategies and to put in place the optimum regula-

tions. It will be critical to engage the full scientific and

research potential to ensure that key decisions are based

on the necessary studies and analyses, not on emotions.

Knowledge-based development is sustainable

Kalle Pirk Director of the Oil Shale

Competence Centre at the Tallinn University of

Technology Virumaa College

6Kukruse mine in 1919 or 1920

ESTONIAN OIL SHALE

100

8

For the last 100 years, oil shale has been one of Estonia’s most

important natural resources and energy sources. The develop-

ment of industry, which started with a fuel crisis in Petrograd in

1915, had seminal importance for Estonia’s energy security and

economic development. “Brown gold” is the underpinning of an

entire industry in Estonia: mines, power plants and oil plants.

Companies that valorise oil shale employ thousands of people,

make a substantial contribution to the state budget, ensure the

country’s energy independence and champion the well-being of

the north-eastern Estonian region and the whole state.

More efficient industry

Of the 20 underground and opencast mines that have operated

over the last century, a number are still in operation. Over its

long history, the industry has developed in all facets: going from

simple combustion of oil shale in furnaces to manufacturing fine

chemical products used in the cosmetics and pharmaceutical

industry. The oil shale industry is today smarter, more efficient

and a better environmental citizen than it has ever been. While

in the early years of the industry, only 30% of the energy stored

in oil shale was harnessed, today’s new technologies allow com-

panies to extract 80% of the energy when co-generating oil, gas

and power.

Mining technologies have also made huge leaps over the decades.

Twenty years ago, it took around 10,000 miners to extract 16 mil-

lion tonnes of oil shale, today only one-quarter of the workforce is

needed to do the same amount of work.

A century of oil shale industry

1916 The first test mining operations are started near Pavandu

1918 On 24 November, the Repub-lic of Government’s Provisional Government discusses the status of the oil shale mines – this date is considered the official start of the Estonian oil shale industry. Oil shale starts to be used as a fuel in various industrial branches as well as in everyday life

1920 The Estonian Mining Board gives the Northern Paper and Cardboard Factory (Põhja Paberi- ja Puupapi-vabrik) permission to perform oil shale exploration in the lands between Sonda and Püssi railway stations

1922 The paper mill AS Põhja Paberi- ja Puupapivabrik assigns all of its rights and claims to AS Eesti Kiviõli

1924 Tallinn Power Plant starts using oil shale as its basic fuel. This marks the beginning of the use of oil shale for generating electricity for the public power grid

1924 The first oil plant is launched in Kohtla, with an output of 10,000 tonnes a year

1937 A fan-driven forced-air ventilation system is introduced in Ubja. Electrical light is introduced in major underground mining tunnels immediately before World War II

1940 AS Eesti Kiviõli and AS Küttejõud are nationalized, and AS Eesti Kiviõli becomes Kiviõli Põlevkivikeemia Kombinaat

1941-1944 A large-scale industrial complex is built in Kiviõli: two new tunnel kilns, eight gas generators and a power plant

1941 German forces capture Kiviõli and an oil shale com-pany, Baltische Ölgesellschaft in Estland, is founded

1949 The oil-shale-fired Kohtla-Järve thermal power plant is launched

1953 The first experimental solid-heat-carrier-based system, the UTT-200, is introduced, with a processing capacity of 200-250 tonnes of fine-grade oil shale a day

1953 The first 500 tonnes of an oil shale varnish called Kukersool is produced, as are epoxy, tanning substance, formalin and other products

1958 The Scientific Oil Shale Research Institute is founded at Kohtla-Järve

1959 The start of the era of major power plants: Baltic thermal power plant is comp-leted in Ida-Viru County

1921 Trial oil produc-tion was launched in Kohtla trial oil factory

9

Caring about the environment

Estonia uses the most modern technologies there are, allowing

oil shale to be mined and enhanced in an increasingly environ-

mentally friendly and sustainable manner. The smoking stacks

that symbolized the oil shale industry in the last century have

been replaced by the clean burning systems required by European

Union standards. Oil shale industries have minimized their envi-

ronmental impact by making significant investments for elimi-

nating past pollution problems and keeping their environmental

footprint lower than ever before.

Even more areas of use

Historically, the first use of oil shale was to produce oil, then

gas for household use; it then started to be used primarily for

generating electricity. Today oil shale is still mainly used for gen-

erating power and heat and for producing shale oil, as well as in the

chemical industry and the construction sector. Uses are also being

explored for the by-products created in the process of mining and

processing oil shale.

Broader-based knowledge and experience

The centuries-long history has turned Estonia into a world leader

in the oil shale sector. Today the Estonian oil shale industry can

be considered the world’s most advanced. Half of all of the oil

shale mined worldwide is extracted in Estonia. Thanks to the

unique know-how, experience and technology amassed over the

century, Estonia itself has become a centre of excellence in oil

shale.

1965 The Viru under-ground mine starts operating

1962 Sirgala opencast mine is established, meant specially for supplying power plants with oil shale

1974 Aidu opencast mine, equipped with a enrichment plant, goes online. It allows the entire oil shale layer to be mined at one time

1970 Narva opencast mine is opened; it supplies oil shale to power plants

1969 Estonia’s most powerful energy producer, the Eesti Power Plant, is launched

1980 Eesti Energia’s Narva oil plant is opened

1995 RAS Eesti Kiviõli is merged with RAS Kiviter

2006 The quantity of commercialized oil shale exceeds the billion-tonne mark

2009 VKG opens the first Petroter-technology-driven shale oil plant

2012 A new-generation oil plant, Enefit280, is opened at Eesti Energia

2011 The Tallinn University of Technology (TUT) Viru College’s Oil Shale Centre of Excel-lence is opened

2012 Development of an international aqua-tic sport centre starts in the Aidu oil shale opencast mine, which is set to be closed

2014 Kiviõli Keemiatööstus becomes fully owned by Alexela Group

2015 The 300 MW oil shale and biomass-fired Auvere power plant goes into operation

2014 VKG’s second shale oil plant Petroter II is launched

2014 The Oil Shale Competence Centre’s new building was completed, which is home to a research and test lab equipped with top-of-the-line technology

2015 VKG opens its third shale oil plant, Petroter III

1981 A gas gene-rator station with a capacity of 1,000 tonnes, the most powerful in the world at the time, is opened

1998 After privatiza-tion, the chemical company Viru Keemia Grupp is established

1973 The world’s biggest underground oil shale mine, Estonia, is opened. It is unique in terms of the depth of mining operations (40-60m)

2003 Põhja-Kiviõli opencast mine goes into operation, featuring the first use of selective oil shale mining technology

2013 VKG opens the Ojamaa oil shale mine, which is one of the most modern ones in Europe

10

Workers in Kukruse mine in the 1920s

ROLE OF THE OIL SHALE

INDUSTRY IN THE ECONOMY

12

In spite of record low prices for power and liquid fuels, the oil shale

industry managed to make a noteworthy contribution to the state

budget in 2015. A total of EUR 120 million flowed into the state

treasury as resource and pollution charges (EUR 74 million), work-

force taxes (EUR 41 million) and other taxes (EUR 5.5 million).

Oil shale enterprises also continued implementing large-scale

development projects in 2015. The total investments made by four

industrial enterprises over the year totalled around EUR 200 mil-

lion.

In cooperation with the state, the enterprises worked to create a

strategic vision and, led by the Government Office, a package of

analyses was initiated to plan the future of the oil shale industry.

The state responded to the drop in market prices and put together

a plan to implement a new system of environmental charges that

would depend on the market price of oil shale end products, where

the resource charges for oil shale processing would be linked to

world market prices for liquid fuels that impact the price of oil

shale end products. To this point, oil shale enterprises had paid

resource charges independently of the market price level, but in

2015, studies were launched to link resource charges to the market

price. The plan is that if the market price drops, the resource

charge for mining oil shale will also go down; if the market price

goes up, so would the resource charge.

State revenue from the oil shale industry

Sales revenue (millions of EUR)

Average number of employees

Oil shale mined (thousands of tonnes)

Energy content of mined oil shale

(MJ/kg) *

Tax footprint 2015 (millions

of EUR)**

Companies related to Eesti Energia’s oil shale industry 456 .4 4 621 11 083 .4 8 84 .2

Viru Keemia Grupp (VKG) 151 .3 1 930 2 637 .1 8 .2 and 11 .8 21 .6

Kiviõli Keemiatööstus (KKT) 23 .2 664 1 349 .9 9 6 .5

Kunda Nordic Tsement (KNT) 37 .7 196 116 .7 7 .3 8 .0

TOTAL 668.6 7 411 15 187.1 120.3

* Calorific value of commercial oil shale** Workforce taxes, resource and pollution charges, corporate income tax, customs duty, land tax

THE ESTONIAN OIL SHALE INDUSTRY

IN FIGURES

A total of EUR 120 million flowed into the state treasury

from the oil shale industry

13

Estonia – the least energy-import-dependent country in

Europe

According to the latest survey from Eurostat, Estonia was only

8.9% dependent on energy imports in 2014. This is the lowest level

in the whole European Union and much lower than the European

Union’s average, which is 53.5%. With this result, Estonia topped

Europe’s longstanding former leader in energy independence for

the second year running. Denmark’s figure was 12.8% in 2014.

Strengthening the domestic energy industry

Above all, the decrease in Estonia’s import dependence level sig-

nals to a stronger domestic energy industry. Consumption of

imported energy sources dropped. With regard to liquid fuels,

which Estonia imports close to 60% of, consumption decreased by

6%. At the same time, the consumption of natural gas, for which

Estonia is 100% import-dependent, dropped an entire 43.5%.

Competitiveness of the oil shale industry

0

5

10

15

20

2012 2013 2014 2015

Heat output in the oil shale industry

Shale oil and other oil shale products

Renewable electricity output in oil shale industry (biomass)

Electrical output generated from oil shale gas

Electrical output directly generated from oil shale

ENERGY OUTPUT OF OIL SHALE ENTERPRISES (TWh)

Source: Eesti Energia, Viru Kremia Grupp, Kiviõli Keemiatööstus

93,485,380,177,975,972,971,666,265,961,761,660,953,548,846,145,544,643,840,634,533,832,130,428,6

17,012,88,9

96,6

ESTONIA

DENMARK

ROMANIA

POLAND

CZECH REPUBLIC

SWEDEN

NETHERLANDS

BULGARIA

LATVIA

CROATIA

SLOVENIA

UNITED K

INGDOM

FRANCE

FINLAND

EU AVERAGE

SLOVAKIA

GERMANY

HUNGARY

AUSTRIA

GREECE

PORTUGAL

SPAINIT

ALY

LITHUANIA

BELGIUM

IRELAND

CYPRUS

LUXEMBOURG

ENERGY DEPENDENCE OF EUROPEAN UNION COUNTRIES IN 2014 (%)

Source: Eurostat

97,7

MALT

A

Estonia strengthened its position as the least energy-import-dependent country in the EU

14

The activity framework related to the oil shale industry is con-

stantly being updated and supports better upgrading of oil shale

and reduction of environmental impact.

Mining ‘after the fact’

The crisis in the world’s oil sector has had an impact on legislation

governing the mining of natural resources in Estonia. In June 2015,

Parliament approved amendments to the Earth’s Crust Act and the

Environmental Charges Act, which allows companies in the sector to

carry forward the unused part of their allotted mining volumes since

2009. The amendment helps oil shale enterprises better adapt to

market demand fluctuations. In the last five years, companies have

mined over 31 million tonnes less than the volumes allotted to them.

Tens of millions in environmental charges

In 2015, nearly EUR 74 million flowed into state treasuries from

oil shale enterprises in the form of resource and pollution charges.

In 2015, government officials considered raising the environmen-

tal charges for 2016 but in the course of the discussions it was

found that this would not be justified. The charges were thus not

raised and the 2015 rates were left untouched. The Ministry of the

Environment launched a project for evaluating external costs of

the environmental impacts.

National Development Plan for Use of Oil Shale

In late 2015, the government approved the National Development

Plan for Use of Oil Shale for 2016-2030, which sets forth the prin-

ciples and directions for the development of the field. In the next

15 years, the main focus will lie on better upgrading of oil shale –

in other words, producing oil, with the use of oil shale for heat and

power set to decrease. To increase the effectiveness of the use of oil

shale, the development plan calls for the best available practices to

be developed and implemented, emissions cut, resource conservation

increased, the amount of waste generated reduced and the recovery of

waste increased. All of this is to further extend the value chain for the

use of oil shale and to make maximum use of the oil shale resource.

The annual amount of oil shale that can be mined each year remains

at 20 million tonnes in the development plan. The position that the

annual allowance should be decreased was taken off the agenda. At

the 20 million tonnes per year rate, oil shale reserves in existing

mines are sufficient to last 17-18 years. There is however enough oil

shale left in Estonia to last decades after that.

Fundamental principles of Estonian climate policy up to 2050

The principles of Estonian climate policy up to 2050, prepared by the

Ministry of the Environment, take into consideration the objectives

of EU climate policy. These call for greenhouse gas emissions levels

to drop 80% by 2050 compared to 1990 levels. The next decrease in

greenhouse gas emissions in Estonia will arrive with the end of the

life cycle of the old oil shale power plants in the 2020s.

A new and better framework for activity in Estonia

19901991

1992

1993 19941995 1996 1997 1998 1999 2000 2001 2002

2003 2004 2005 20062007 2008

20092010 2011 2012

GREENHOUSE GAS EMISSIONS IN ESTONIA, 1990-2014 (MILLIONS OF TONNES)

40.136.9

26.9

21.1 21.820.0 20.7 20.3 18.8 17.4 17.1 17.5 17.0

18.8 19.1 18.4 17.821.0 19.5

16.320.0 20.6 19.5

* Forecast

Source: Eurostat, Ministry of the Environment

2013

21.8

2014

21.22015*

17.6

15

The Paris climate agreement

At the end of 2015, 195 countries signed a pact in Paris to limit

greenhouse gas emissions. The purpose of the agreement is to

keep the rise in global temperature well under 2°C compared to

pre-Industrial Revolution levels. Encompassing around 95% of the

global greenhouse gas emissions, it is the first truly global agree-

ment to draw attention to climate change and its impacts.

The objective of the Paris Agreement is long-term and requires

the entire energy sector to be reshaped. The speed of the process

depends largely on the development of the new and existing low-

carbon technologies (agriculture, production, transport, energy

production), while maintaining people’s existing quality of life.

The European Union’s climate policy objectives

The European Union’s 2014 climate policy objectives are signifi-

cantly more ambitious than those of any other Paris Agreement

signatory. The EU’s climate policy development will proceed from

the five-year cycle of reviewing compliance with the Paris Agree-

ment’s targets and will thereby encourage other countries as well

to devote more attention to climate policy. In addition to the global

decrease in emissions, it will also allow the carbon leak threat to

be reduced and contribute to more equitable international trade.

The strategic development areas for Estonian oil shale companies

support achievement of the European Union’s objectives. Gener-

ating energy from oil shale is becoming increasingly efficient and

environmentally friendly, as the emphasis is placed on the produc-

tion of oil, the CO2 emissions of which are low.

The European Union Emissions Trading System

Since 2011, the European Union has had an oversupply of CO2

allowances due to the recession and decrease in production. In

2015, the European Parliament approved the plan to carry out, in

2019, a reform of the emissions trading market with the goal of

reducing the oversupply and lack of clarity and to thereby improve

the investment environment. It is likely that it will result in a rise

in the price of CO2 emissions allowances.

European Union climate policy

By focusing on producing oil with low CO2 emissions, Estonian oil shale enterprises are contributing to achieving the EU’s goals

16Shale gasoline station in Virumaa in the 1930s

OIL SHALE VALUE CHAIN:

FROM MINING TO FINISHED PRODUCT

18

Enough oil shale energy to last more than 50 years

Oil shale formed in Estonia 450 million years ago. The first

efforts to mine and study the energy potential of this “brown

gold” started a hundred years ago. Over the century, slightly over

a billion tonnes of oil shale have been extracted from the earth’s

crust in Estonia. Of the current 4.8 billion tonnes in oil shale

reserves, there is 1.3 billion tonnes of active oil shale left that

can be mined without restrictions. At today’s rate of consump-

tion and efficient and responsible activity, it will last for another

50 years at least.

According to the positive scenario, this time may be even longer,

as the other 3 billion tonnes of oil – not accessible due to unfavour-

able geological conditions and restrictions – could also be mined

and upgraded in future as technology advances.

Estonia’s two main oil shale deposits are located in north-eastern

Estonia. The thickest oil shale strata lie in an area between Rak-

vere and Narva, in the so-called “Eesti” site where industries have

established both underground and opencast mines. The oil shale

layer being mined is between 2.7 and 2.9 metres thick. As the oil

shale in the so-called Tapa site between Väike-Maarja and Ambla

is of low quality and lies deep, no oil shale is being mined there.

Mining permits and volumes

MINING METHODS

• Opencast mining – in places where the oil shale layer lies up to 30 metres deep, the oil shale is mined in opencast mines, after removal of the overburden.

• Underground mining – if the oil shale layer lies deeper than 30 metres, an underground mine has to be built – mine shafts have to be established, reinforced and the necessary systems for extracting the rock put in place.

5 million tons less oil shale than allotted

In Estonia, four companies hold permits to mine oil shale – Eesti

Energia (EE), Viru Keemia Grupp (VKG), Kiviõli Keemiatööstus

(KKT) and Kunda Nordic Tsement (KNT). Pursuant to the state’s

long-term development programme, 20 million tonnes of oil shale

can be mined each year in Estonia. The actual volumes of the four

oil shale enterprises have been only around 15 million tonnes due

to the low market prices for electricity and liquid fuels as well as

because of the limited production capacity. In the last four years,

companies’ average mining volume has been 75% of the allowed

amount, which means that close to 5 million tonnes of oil shale

less than the allotted volume is extracted each year. In 2015, none

of the oil shale mining enterprises sought an increase in their

2016 limit using allotment carryover from the past seven years.

Under conditions of responsible use, there will be enough oil shale

in Estonia for at least 50 years

19

Annual volume allotted, thousands

of tonnes

Actual amount mined (thousands of tonnes)*, share of the allowance used (%)Average %

2011–2015Company 2011 2012 2013 2014 2015

Eesti Energia 15 010 14 478 96% 13 124 87% 11 830 79% 11 614 77% 11 083 74% 83%

Viru Keemia Grupp 2 772 647 23% 1 097 40% 2 344 85% 2 483 90% 2 637 95% 66%

Kiviõli Keemiatööstus 1 980 637 32% 615 31% 755 38% 1 058 53% 1 350 68% 45%

Kunda Nordic Tsement 238 146 61% 107 45% 98 41% 113 47% 116 49% 49%

TOTAL 20 000 15 908 53% 14 943 51% 15 027 61% 15 268 67% 15 186 71% 61%

* Geological reserves without considering losses

15 MILLION TONNES OF OIL SHALE IS MINED EACH YEAR – LESS THAN THE 20 MILLION TONNES ALLOWED

Estonia’s needs for 1 month of transport fuel

jobs

million in tax revenue

488

EUR 8

of the annual mining cap

MILLION TONNES OF OIL SHALE IN FIGURES

15%

20

Estonia’s unique energy sector is based on the multifaceted use of

oil shale. The majority of it – 73% – is used to generate electricity.

The rest is used to generate heat and produce shale oil. Oil shale

has uses in the chemical industry and a few percent of the mined

volumes are used for producing cement and road construction.

Although the value chain of oil shale is longer than ever before, the

depressed fuel prices are forcing companies to invest even more

into research and testing to find novel opportunities for the use of

oil shale and its by-products.

Use of oil shale

IN 2015

• the average market price of electricity fell 17%

• oil shale remained the cheapest residential heating source

• the average oil price fell 44% compared to 2014

Use of oil shale decreased by 7%

Oil shaleOil shale

processing plantsEnergy

productionCentral heating

HeatMine

Lime factoryLime

Building materialsGravel and concrete

Sales to business customers

Steam

Power exchangeElectricity

Fine chemicalsPhenol water

Oil / fuelOil shale

Electricity production

A raw input for construction materials and

electrodesOil coke, bitumen

Construction materialsMass stabilisation in road and harbor construction

Soil improvementAsh

OIL SHALE VALUE CHAIN

21

In 2015, a total of 10.3 TWh of electricity was produced in Esto-

nia, which is 17% less than the year before. The continuing drop in

electrical output was impacted by the lower power exchange prices

and the possibility of importing electricity from the Nordics more

cheaply. In spite of the decrease in output, power generation still

outstripped domestic consumption.

In 2015, for the first time in Estonia, less electricity was produced

from oil shale than was consumed in the country. While domestic

consumption was a little over 7.4 TWh, 6.8 TWh of electricity was

generated. During the year, 1.5 TWh was generated from renewable

energy sources, which made up around 17% of the total consumption.

Price of electricity in decline

In 2015, the average prices of electricity fell in every bidding area

in the Nordic electricity market. The system price, which expresses

the ideal price level for the market, dropped 29% and the aver-

age price for the year was 20.98 €/MWh. The main reasons for

the price drop were good opportunities to produce hydroelectric

energy in the Nordics and the modest growth in consumption.

The average price in the Nord Pool Spot (NPS) in the Estonian bid-

ding area in 2015 was 31.08 €/MWh, which is 17% lower than in

2014. The average monthly prices in 2015 were between 26 and

35 euros per MWh. The electricity market price was less than

30.70 €/MWh (the regulated price valid until the end of 2012) in

the case of 53% of last year’s hourly prices.

Electricity is a noteworthy export article for Estonia. In 2015,

Estonia sold 6.4 GWh of electricity to foreign countries, of which

95% went to Latvia.

Electricity

2012 2013 2014 2015

Eesti Energia 9 201 10 278 9 343 7 312

Viru Keemia Grupp 210 190 217 311

Kiviõli Keemiatööstus 42 38 39 41

TOTAL POWER OUTPUT 9 453 10 506 9 599 7 664

of which oil shale electricity 8 776 10 193 9 259 6 754

Consumption of electricity in Estonia 7 407 7 332 7 417 7 440

Share of oil shale electricity of total consumption of electricity in Estonia

119% 139% 125% 91%

ELECTRICITY OUTPUT AND ELECTRICITY CONSUMPTION IN ESTONIA, 2012–2015 (GWh, %)

Average price 2014 2015 Change

System price 29 .6 21 .0 -29 .1%

Finland 36 .0 29 .7 -17 .6%

Estonia 37 .6 31 .1 -17 .3%

Latvia 50 .1 41 .8 -16 .5%

Lithuania 50 .1 41 .9 -16 .3%

ELECTRICITY PRICES ON THE NORD POOL SPOT POWER EXCHANGE 2014-2015 (€/MWh)

AVERAGE MONTHLY PRICES OF ELECTRICITY ON THE NORD POOL SPOT ESTONIA POWER MARKET (STARTING 1 APRIL 2010), €/MWh

0

15

30

45

60

2010 2011 2012 2013 2014 2015

Source: Thomson Reuters

Source: EE, VKG, KKT, Statistics Estonia

2016

22

Estonia is one of the world’s largest producers of shale oil. Shale

oil’s advantages over petroleum-sourced heavy fuel oil are its low

viscosity, low pour point and low sulphur content. Shale oil is used

as an additive in marine fuels and for fuelling boiler units and

industrial furnaces.

Thanks to stable demand on foreign markets, the volume of shale

oil output has increased with each passing year. In 2015, a total

of 915,000 tonnes of electricity was produced in Estonia, which is

one-fifth more than the year before. More than 90% of the output

was exported: over half (61%) went to the Netherlands, and one-

tenth went to Belgium and Sweden.

Nowadays, highly energy efficient, environmentally clean pro-

duction technologies are used to produce oil. The centuries-long

experience of Estonian engineers and their contribution into

technological progress provide ample evidence for the claim that

Liquid fuels

2012 2013 2014 2015

Eesti Energia 209 214 265 337



TOTAL 596 628 760 915

THE ESTONIAN OIL SHALE INDUSTRY’S LIQUID FUEL OUTPUT, 2012-2015 (THOUSANDS OF TONNES)

PRICES OF LIQUID FUELS ($/BBL)

0

30

60

90

120

150

2012 2013 2014 2015


0

200

400

600

800

1000Brent crude oil ($/bbl)

Fuel oil 1% (€/tonne)

2016

local oil shale enterprises are using the world’s best technology

for producing shale oil. The new technologies allow oil shale to be

more efficaciously upgraded, leading inevitably to a reduction of

the workforce in the oil shale sector.

Oil producers are actively developing possibilities to distil shale oil

into fuels with higher value. For example, Eesti Energia is getting

ready to distil petrol from oil shale gas; it can be used to produce

motor fuels and as a raw material used in the chemical industry.

FUEL OIL AND BRENT CRUDE OIL CRACK SPREAD

-15

-12

-9

-6

-3

0

2012 2013 2014 2015


2016

23

Oil price halves

The continuing downtrend in oil prices that started in the second

half of 2014 left a strong mark on 2015. Although after hitting a

low point of 45 USD per barrel in January 2015, the price of Brent

crude rose back to 69 USD per barrel, the drop in prices continued

in the second half of the year and the price of crude oil at the end

of the year – 37 USD per barrel – was the lowest it had been all

decade. The average price of Brent crude underwent a 44% drop

from 2014 levels, falling to 54 USD per barrel.

According to the forecasts for the oil shale industry, energy pro-

duction and demand will grow in absolute figures in the next 10-15

years and in spite of the slight growth seen in the market share of

renewable energy, the market share of fossil energy carriers will

not fall much below 80%. Production of oil from oil shale depends

largely on domestic policy and the world price of oil. To maintain

the competitiveness of the local industry, both companies and the

government are making increased efforts, such as developing a

stable taxation environment that takes into account the fluctua-

tion of prices on the world market.

In 2015, for the first time in Estonia, less electricity was produced from oil shale than was consumed in the country. At the same time shale oil production went up by 17%

24

The use of oil shale for generating heat has decreased consistently

in the recent years. The reason for the lower demand is milder

weather and increased investments into energy conservation. In

2015, a total of 6.7 TWh of heat was generated, which is 0.4 TWh

less than a year before. As it is not possible to store or transport

heat efficiently, it is consumed immediately and in close proximity

to the production site. Estonian heat output is therefore more or

less equal to demand.

Heat from oil shale by-products

Most of the thermal energy generated in Estonia comes from

co-generation (heat and power plants) as this is environmen-

tally more sustainable. There are several types of co-generation

plants and they run on different fuels. One of the largest ones,

Balti Power Plant – has an output of up to 400 MW of heat. Eesti

Energia routes the heat produced there to the Narva Soojusvõrk’s

district heating systems and hot water consumers. Steam is also

supplied to industrial consumers.

The Kohtla-Järve, Ahtme and Jõhvi areas are supplied with heat by

VKG’s subsidiary VKG Soojus. The company uses the residual heat

generated in the course of processing oil shale. The residual heat

arrives at consumers in the Kohtla-Järve and Jõhvi areas through

an 18.5-kilometre long trunk line. VKG Soojus distributes the

heat generated in the oil shale industry both to industrial enter-

prises in Ida-Viru County and consumers in the region; electricity

from co-generation is also used across Estonia. Co-generation of

heat and power at KKT covers the company’s own needs as well as

those of the city of Kiviõli.

Oil shale regions enjoy preferential status

In 2015, the limit price of heat for end consumers approved by the

Competition Authority averaged 66 euros per MWh across Esto-

nia. Residential heating was still more affordable than the aver-

age in cities where it is generated as a by-product of the oil shale

industry. For example in 2015, heat only cost 34 euros per MWh

in Narva, while the price was 51 euros in Kiviõli and Sillamäe and

55 euros in Ahtme, Jõhvi and Kohtla-Järve.

Heat

2012 2013 2014 2015

Eesti Energia Narva Power Plants 599 584 603 604



TOTAL 1 057 1 324 1 291 1 244

Consumption of thermal energy in the form of district heating in Estonia

8 598 8 098 8 015 7 789

OIL SHALE COMPANIES’ HEAT OUTPUT AND HEAT CONSUMPTION IN ESTONIA, 2012–2015 (GWh)

Source: EE, VKG, KKT, Statistics Estonia

Residential heating was still more affordable than

the average in cities where it is generated as a by-product

of the oil shale industry

25

The scale of uses for chemicals derived from oil shale is very broad.

Chemicals produced from Estonian oil shale can be found in dyed

textiles and tanned furs, the hair dyes marketed by L’Oréal, Wella

and Schwarzkopf, and facial creams and suntan lotions. They are

also used in producing Samsung TV screens and Lexus and Toyota

automotive parts.

Honeyol and Rezol, two oil shale phenol fractions, are used as

epoxies in the tyre, plywood and oil industry and as base chemi-

cals for making paints and lacquers. Starting in 2012, the so-called

“red resin” is also produced from Estonian oil shale, which is used

to make automotive tyres – it is used by the world’s leading tyre

manufacturers such as Goodyear, Pirelli and Bridgestone.

Valued chemicals

VKG is today the only company in Estonia that distils valuable

fine chemicals from the oil products of plants that use the Kiviter

technology. VKG is capable of producing extremely pure (in excess

of 99%) chemicals that can fetch up to several hundred euros per

kilogram. In 2015, VKG sold about 500 tonnes of fine chemicals

and phenol products.

The largest consumers of Estonian oil shale chemicals are well-

known companies in the European Union, Japan and India. The

fine chemicals made in Kohtla-Järve have also reached Iran and

Latin America.

KKT also launched a research project in 2015 to investigate ways

of upgrading oil shale into chemical products. This constitutes

rediscovery of an old science that KKT hopes will reduce depend-

ence on world oil prices. It will also ensure greater value for oil

shale and refining shale as opposed to producing oil would result

in 10 times less CO2 emissions. The quantities of solid waste gener-

ate would also decrease.

Fine chemical industry

The most valuable part of Estonian oil shale is the extremely reactive fine chemicals

26

The potential of by-products of the energy generation process was

recognized already decades ago. But they are still only on the cusp

of their real heyday: Products made from oil shale by-products can

be used as analogues for many construction materials and com-

modities. Making maximum use of the by-products will reduce

the environmental impact while creating economic benefits at the

same time. Transforming industrial waste to valuable, environ-

mentally friendly products is currently a field of great interest in

the European Union and elsewhere in the world.

Each year, oil shale mining and enrichment generate as by-prod-

ucts close to 20 million tonnes of mine waste and ash that can

be used in power generation. Preventing these from ending up

in landfills reduces the environmental impact of oil shale and

increases the competitiveness of the industry.

Crushed stone from opencast oil shale mines

In 2015, mining and enrichment of oil shale generated around

12 million tonnes of mine waste consisting of limestone, dolo-

mite, marl and a low level of oil shale as well. One-third of this

was used as crushed limestone for road construction, landscap-

ing and filler.

Mine waste is essentially limestone. Actively using mine waste

means fewer limestone opencast mines to be opened. Due to the

high cost of transport, crushed stone from oil shale mines has

been used only in Ida-Viru County construction sites so far. For its

part, the state can do more to contribute to waste recovery through

establishing various systems of charges and tax incentives.

Uses for by-products of the energy generation process

2015

7 296

11 973

2012

7 351

9 708

2013

8 5967 827

2014

8 5548 083

Shale ash, of which used as commercial products

Mine waste, of which used as commercial products

BY-PRODUCTS GENERATED BY THE OIL SHALE INDUSTRY (THOUSANDS OF TONNES) AND THEIR USE AS COMMERCIAL PRODUCTS (%)

2%

29%

4%

89%

4%

70%

4%

33%

Standardized products from oil shale ash

Estonia is one of the few countries that categorises the fine ash

generated in the course of power generation and then disposed of

in landfills as a hazardous waste. In spite of this fact, many prod-

ucts made of burnt oil shale, i.e. oil shale ash, are standardized,

allowing the ash to be used better than if it were just dumped in

a heap.

In 2015, the Estonian Centre for Standardization published a

new standard that allows the ash from pulverized shale combus-

tion furnaces and bag filters as well as cyclone ash to be used for

producing cement, concrete and cellular concrete in Estonia and

27

elsewhere. Instead of waste status, oil shale ash was reclassified as

a product, ensuring that it enjoys a position on the construction

products market.

In 2015, the Estonian oil shale industry generated 7.3 million

tonnes of ash, of which 2% was recovered for new products. Shale

ash has very high potential for use as a product. In addition to

cement and concrete, it can be used to produce masonry units,

other construction materials, and plastics.

A vehicular road made of ash

2015 saw the OSAMAT pilot project – launched in 2010 as part of

the European Union programme LIFE+ – continue. Its goal is to

significantly increase the use of the oil shale ash that is a by-prod-

uct of power generation. Increased use of oil shale ash means less

CO2, a greenhouse gas, is formed and natural resources such as

crushed stone, sand and clay can be conserved. In the course of the

testing, oil shale ash was added to concrete mixes used for mass

stabilization of marshy and clayey areas in highway construction.

Test areas for existing secondary roads built on soft substrate in

Lääne-Viru and Ida-Viru County were also constructed. The results

of the pilot project confirmed that the test segments constructed

of oil shale ash have high strength and load bearing capacity indi-

cators and that there was no negative impact on the environment.

User manuals and standard documents are being developed for

Estonian road construction technology.

Fly ash for more fertile soil

For decades now, oil shale ash has been used to raise the pH of farm-

land. Eesti Energia separates the fine particles and calcium-rich

fly ash from smoke gases generated during the high-temperature

combustion of oil shale, and uses it as a fast-acting neutralizer of

acidic soil. Fly ash also contains many minerals such as phospho-

rus, potassium, magnesium, zinc, copper, sulphur, manganese and

silicon, which can raise the fertility of soil. In 2015, four years of

testing was completed in the Estonian University of Life Sciences

forest section. The results showed the nutrients contained in soil

amendments based on fly ash were suitable not only for improving

cropland characteristics but also for growing forest stands and for

stimulating the rate of growth of forest stands on peat soils.

PIPING ASH UP THE HILL

In 2015, VKG adopted the Baltics’ and Scandinavia’s most powerful conveyer system for removing ash. It will decrease noise and dust levels, reduce the amount of emissions and keep the surroundings cleaner. The new system, which allows 380 tonnes of ash per hour to be transported, delivers ash from all three Petroter shale oil plants into an ash heap through a 1.5 kilometre long pipe conveyor. At the end of the conveyer, ash is mixed with water, spread and rolled into the landfill. This process creates a geotechnically stable water-resistant and concrete-like monilith.

Now fewer trucks are required for transporting the ash. The trucks’ journey also was shortened by four kilometres. Compared to the hydro ash removal system, this new technology conserves clean water.

28

Kiviõli ash mountain in the 1930s

OIL SHALE INDUSTRY

AND THE ENVIRONMENT

30

91,1

81,9

42,8

33 million euros into the environment

The ecological footprint of the Estonian oil shale industry is

smaller than ever before. For the sector, caring about the environ-

ment is now a priority. As a result of consistent efforts, compa-

nies have minimized the environmental impacts of mining and

upgrading oil shale, simultaneously increasing the effectiveness

of use of oil shale as a resource.

In 2015, oil shale companies’ direct investments into environmen-

tal conservation totalled nearly EUR 33 million. Factoring in indi-

rect investments, environment-related investment stood at EUR

83 million. In comparison, the foundation Environmental Invest-

ment Centre invested EUR 45 million into environmental projects

in 2015.

Investments into the environment

ESTONIAN OIL SHALE COMPANIES’ DIRECT AND INDIRECT ENVIRONMENTAL INVESTMENTS IN 2012-2015 (MILLIONS OF EUROS)

Kunda Nordic Tsement

Kiviõli Keemiatööstus

Viru Keemia Grupp

Eesti Energia

2012 2013 2014

81,8

2015

* Includes indirect environmental investments in connection with expanded production volumes and the establishment of the Petroter III shale oil plant

*

New-generation plants have less of an environmental impact

Despite the complicated times in the oil shale sector, many invest-

ment-intensive production units were completed in 2015 allowing

more effective upgrading of oil shale and making full use of its

potential.

In 2015, Eesti Energia’s new Auvere power plant began generat-

ing power and feeding it to the power grid. Auvere plant uses an

environmentally clean fluidized-bed technology. Up to 50% of

the oil shale used in the power plant can be replaced by biomass.

Other fuels such as peat or coal can also be used to generate elec-

tricity. The capacity for use of biomass reduces the environmen-

tal impact of the power plant and increases its competitiveness

amidst increasingly stringent European Union climate policy

conditions.

At the end of the year, VKG opened its third oil plant, which uses

the Petroter technology, noted for its superb performance. During

2015, VKG oil shale plants processed more than 3.5 million tonnes

of oil shale, producing 506,000 tonnes of shale oil, which is 56%

of the total volume of oil produced in Estonia. At over 80% energy

efficiency, the plants’ footprint is many times smaller than in the

case of past technologies. The construction of the Petroter plants

is the largest investment in Estonian industry made by a privately

owned company in recent years. VKG invested over EUR 220 mil-

lion into three plants, of which EUR 84 million was used to build

Petroter III.

In 2015, Eesti Energia’s Enefit280 oil plant produced a record of over

137 thousand tonnes of shale oil. Due to the innovative technol-

ogy used in the Enefit280 plant, its energy efficiency is higher than

31

that of other plants and the emissions into ambient air are many

times lower. The unique technology used at the new oil plant enables

electricity to be produced from residual heat besides shale oil and

oil shale gas. As a result of this co-generation, oil shale yields more

energy and CO2 emissions from generating electricity based on the

use of residual heat and oil shale gas have been cut by up to 40%.

In 2015, Eesti Energia announced a procurement for increasing

the use of oil shale gas in unit no. 8 of the Eesti power plant. The

upgrade will allow using the gas produced in oil plants more effi-

ciently and reduce emissions into ambient air significantly. It is

planned to complete the works by the end of 2018.

Also in 2015, KKT completed long-running preparations at the

second reactor in its solid heat carrier system. As the tests con-

ducted showed that the required stability had been reached in the

reactor’s operation, KKT was able to receive an authorization for

use for its most recent oil production equipment. The company

also started upgrading its technology for purifying heavy oil so

that it could produce higher-quality shale oil with lower environ-

mental impact.

A contemporary approach to environmental protection

The oil shale sector uses the ISO 14001 standard environmental

management in its everyday work, aiming to map all environmental

impacts and constantly improve ways of dealing with the impacts.

That means that the companies analyse systematically environ-

mental impact, clean consumption and recovery of resources and

engage in close cooperation with research institutes for developing

more conservation-minded and innovative solutions.

The impacts of mining on the environment are related to land

and resource use, changes in the water regime, waste genera-

tion and the emergence of new surface features. The extent

and nature of environmental impacts depends largely on

whether underground or opencast mining is used to extract

the oil shale.

Oil shale, a shaper of the landscape

Any sort of mining entails environmental impacts to some degree.

Underground oil shale mining creates areas prone to subsidence

and sinkholes. Opencast mining, on the other hand, creates

Environmental impacts associated with miningentirely new landscape forms. Heaps of mine waste accumulated

over the years contain hundreds of millions of tonnes of produc-

tion waste.

Underground mining – easier on nature

Compared to opencast mining, underground operations have less

of an impact on local population and the environment. The exist-

ing landscape and ecosystems are preserved, although they may

be affected to some extent by changes in the soil water regime. The

transportation of oil shale from mines by conveyor is dust- and

noise-free and preserves local roads.

32

SHARE OR OIL SHALE EXTRACTED VIA OPENCAST AND UNDERGROUND MINING (%)

2005 2025

41% 61%

59% 39% Opencast mining

Underground mining

2015

48%

52%

At the same time, underground mining leads to an increas-

ing amount of mine waste that goes into landfills, which in the

case of opencast mining would stay in the mines. Mine waste is

already successfully used in road construction and to fill in under-

ground mine passages. The oil shale industry is constantly looking

for additional ways to recover mine waste in order to use its full

potential.

Today oil shale is mined using the underground method in VKG

Ojamaa mine and Eesti Energia’s Estonia mine and using the

opencast method in KKT’s Põhja-Kiviõli opencast mine and Eesti

Energia’s Narva opencast mine.

Oil shale mining in Estonia is clearly moving in the direction of

underground mining. According to the best of our knowledge

today, in 2030, nearly all oil shale will be mined in underground

mines, as the mining is moving deeper into the earth’s crust each

year in search of the valuable brown gold.

Increasingly more efficient mining

In 2015, Eesti Energia started adopting advanced room-and- pillar

mining technology in 2015, which due to the lower volumes of

penetration, has lower mining costs than the current method.

The new method is similar to room-and-pillar mining in that the

ground surface remains intact; at the same time, the mining takes

place along a 700-metre slice instead of the usual 200 metre wall.

Eesti Energia, which invested over 21 million euros into develop-

ing the new methods, obtained the first output in January 2016.

Full capacity will be achieved in early 2017, when the supplemen-

tal annual volume will be close to 0.8 million tonnes of oil shale.

KKT upgraded the opencast mine’s technical equipment in 2015 to

increase efficiency. The most important addition was the acquisi-

tion of the largest excavator in the Baltics, capable of harvesting

much more oil shale for the same expense outlay.

33

Over the century, the oil shale industry has left a discernible mark

on the landscape of Ida-Viru County. Ash hills rise in the area

between Kiviõli and Narva, along with the highest artificial hill

of semi-coke in the Baltics, and artificial lakes; pine forests cloak

undulating afforested knolls.

Fascinating sights

An integral part of oil shale mining is the process of recondition-

ing former opencast mine areas to return them as close to the

pre-mining condition as possible or at least shape an equivalent

landscape. Over time, it has become better thought-through and

there is an increasing ability to make use of the industrial land-

scape in a positive way for the region. Ida-Viru county’s obligatory

sights include the Estonian mining museum, unique in Europe,

located in a onetime oil shale enrichment plant; the former Aidu

opencast mine, being turned into an aquatic sport centre; and the

Kiviõli adventure park set on a semi-coke hill.

A new generation of forests instead of oil shale

A large share of the landscape reconditioning involves afforesta-

tion of the opencast mines, in the course of which the mining area

is restored to as close to the natural state as possible. The afforested

opencast mine areas do not look much different to natural forests.

The mined areas are levelled while the opencast mine is still opera-

tional, young trees are planted. When the mining ends, the area

will be clad in forest already several decades old, or by cropland.

In 2015, the State Forest Management Centre was commissioned

by Eesti Energia to plant young pine trees on 49 hectares of open-

cast mine area.

Restoring the landscape

AFFORESTATION OF FORMER OPENCAST AREAS (HECTARES)

2012

131

2013

282

2014

141

Beloved lakes

Vesiloo Lake, created in the 1970s in Viivikonna opencast mine,

is the first example of the diversity of mined and reconditioned

areas. Later on, Presidendi Lake, Kenajärv Lake and other smaller

artificial bodies of water were also established in Viivikonna and

Sirgala opencast mines.

The heart of the sport and recreational centre established in Aidu

opencast mine, closed in 2012, is a rowing lane that meets interna-

tional requirements. The Aidu aquatic sport centre is a great place

to hold world-championship level tournaments and offers pos-

sibilities for rowing and canoeing, motorized water sport, scuba,

fishing, sailing and hiking. In 2015, Aidu aquatic sport centre

received 8th place in the 100 Estonian Treasures voting dedicated

to the country’s centennial. Aidu was visited in 2015 by over 850

aquatic sport aficionados and over 1000 people came on guided

tours of the future competition venue.

2015

49

34

Industrial emissions into ambient air have consistently declined

over the years. In 2015, a “cleanliness record” was set yet again

– emissions of SO2, NO2, CO2 and solid particulates reached an

historical low. Compared to 2014, quantities have dropped by a

respective 23%, 32%, 59% and 21%. Compared to five years ago,

the solid particle count in air has dropped eightfold and SO2 and

NO2 emissions are less than half of previous levels.

Power generation from oil shale meets the more stringent air

emissions limits set forth in the 1 January 2016 Industrial Emis-

sions Directive. The European Union climate and energy package

obliges member states to reduce greenhouse gas emissions by 40%

by 2030 (compared to 1990 levels). In addition, more stringent

European Union requirements are coming into effect for many

airborne emissions, the aim being to improve ambient air quality.

Effective filtration equipment

The ever-smarter production process in the Estonian oil shale

industry has made a definite contribution to the constant decrease

of airborne emissions. VKG Energia is the first company in Esto-

nia to introduce the use of desulphurization equipment for smoke

gases. The company’s first NID (Novel Integrated Desulphuri-

zation) technology based system was installed in 2008 and the

second one was launched in 2015. The third, powered by flue-gas

desulfurization (FGD) technology, was launched in summer 2016.

The new equipment has allowed VKG to reduce the sulphur dioxide

emissions threefold, improving the air quality in the area.

In the last five years, Eesti Energia has installed desulphuriza-

tion and denitrification equipment on the older pulverized-com-

bustion-technology-powered energy-generating units at Narva

Emissions into ambient air

2012

DECREASE IN AIRBORNE EMISSIONS (THOUSANDS OF TONNES) WITH OIL SHALE MINING VOLUMES REMAINING STABLE

2013

36,7

2014

33,1

2015

38,2

SO2

10,1 9,0 8,8

NO2

6,49,3 8,7

Solid particles

11 911

14 207 13 781

CO2

2012 2013 2014 20152012 2013 2014 2015 2012 2013 2014 2015

29,5

6,0

10 833

3,6

35

power plants, as a result of which sulphur emissions have dropped

to one-third and nitrogen emissions have halved. The older pul-

verized combustion units were transitioned to a limited operat-

ing mode, and when this is over, the units will be shut down. In

addition to reducing sulphur and nitrogen emissions, the company

also modernized the electrical filters at its power plants in 2015,

which will significantly cut the quantities of fly ash released into

the atmosphere.

In addition, Eesti Energia built five new smokestacks in connec-

tion with installation of the filtration equipment. These will allow

the energy units to be used more flexibly and efficiently and, by

superior measurement of environmental emissions, make it pos-

sible to manage production better in the new market situation.

In 2015, KKT introduced the use of modern SCADA air and steam

measurement system that will allow the efficiency of environmen-

tal resources and the impact on the environment to be assessed.

According to the Estonian Geology Centre, the main source of

mining water is rainwater. Rainwater accounts for about 80% of

the mining water in opencast mines and 50% in underground

mines. To a lesser extent, mining water originates from ground-

water and water from closed mines in the area. To keep mines dry,

water is pumped out of the area and diverted to settling tanks

to remove the suspended solids. After treatment, the water is

returned to nature; it primarily flows into the Gulf of Finland and

some of it into Lake Peipus as well.

The water in mines’ settling basins is often cleaner than that in

rivers and lakes and is well-suited for trout farming, for example.

Drainage of waterlogged mine areas has had a positive effect on

forest growth and agriculture in the surrounding areas.

In 2015, some 120 million cubic metres of water was pumped out

of mines and opencast mines, which is about on par with the year

before.

Water and the oil shale industry

The oil shale industry is cleaner than ever before

36A laboratory at the Oil Shale Resrarch Institute in 1967

OIL SHALE

AND ESTONIAN SOCIETY

38

In 2015, the oil shale industry contributed EUR 120 million to the

Estonian state budget in the form of taxes and dividends. In addi-

tion, oil shale enterprises actively continued their CSR traditions

in spite of the complicated times. Support was provided for educa-

tion, science and culture and a number of traditional events.

Jobs in the oil shale industry

The falling price of oil put the oil shale industry into a complicated

situation in 2015 and 2% of the workforce in the sector lost their

jobs. The Unemployment Insurance Fund and trade unions tried

to find new employment for the people in the region who were laid

off. The situation was eased by the fact that many of the unem-

ployed chose to retire. The average employee’s time worked for the

company decreased by a year compared to 2014.

In spite of the wave of layoffs, the oil shale industry in Ida-Viru

County remains one of the region’s biggest employers. The oil

shale sector employed 7,411 people in 2015, but many times more

people are indirectly related to the industry in customer service,

lodging, construction or transport services. The average gross

wage in oil shale enterprises in 2015 was 1,400 euros, which is

nearly twice as much as the average gross wage in Ida-Viru County.

How the oil shale industry contributes to Estonian society

Bringing up a new generation

In 2015, Eesti Energia launched the Insenergia programme to

support the development of top engineers. In the framework of

the programme, 15 students were given the opportunity to gain

unique practical experience. The students were mentored by Eesti

Energia experts. The students received 10,600-euro scholarships

and given the opportunity to take field trips to industrial enter-

prises and in-house training at Eesti Energia.

The cooperation with the Noored Kooli (Young People to School)

programme is one way in which Eesti Energia and KKT provide

for the education of engineers in Ida-Viru County. In 2015, maths,

chemistry and physics teacher Liisi Sarap continued teaching at

Sinimäe School in Vaivara Municipality. Eesti Energia provided a

6,080-euro stipend over two years to compensate Sarap’s costs of

living, language study and transport. It’s hoped this enthusiastic

young teacher will kindle students’ interest in engineering.

Supporting education

Total employees 7 411

Average number of years worked 12

Annual decrease in number of employees (%) -2%

Average gross monthly wage (EUR) 1 400

EMPLOYMENT IN THE ESTONIAN OIL SHALE SECTOR (2015)

39

VKG continued cooperation with the St. Petersburg State Institute

of Technology, allowing top students to work in internship spots

in leading chemical enterprises, giving them the opportunity to

apply their knowledge in practice.

For many years now, VKG has helped to organize Estonia’s

oldest intermural science tournament – the Competition of Five

Schools – and supports the best secondary school students in

Ida-Viru in participating in the competition. Each year, the com-

pany opens its doors to close to 800 schoolchildren and univer-

sity students, who discover the behind-the-scenes goings-on at

VKG. VKG also actively contributes to the “Back to School” ini-

tiative, introducing the modern oil shale and chemical industry

to schoolchildren.

In 2015, oil shale companies also entered into an understanding

with Jõhvi State Gymnasium, the goal of which is to ensure strong

science education at the school. Companies are contributing to

the development of engineering education at this state-operated

upper secondary school, involving employees who introduce stu-

dents to modern industry and the interesting opportunities it

opens up. Youth also receive career counselling and advice about

interesting work in the speciality with a respectable compensation

package.

Artistic jewellery from oil shale

To kindle youth interest in the oil shale sector, in 2015 KKT hosted

a group of students from Narva Vocational Education Centre and

Cambridge University.

In the framework of the project started at the Oil Shale Com-

petence Centre, students at the jewellery art speciality at the

Estonian Academy of Arts completed work on beautiful pieces of

jewellery made from oil shale, which can now be admired in exhi-

bition halls all over Estonia.

ENTRUM comes to a successful closes

2015 marked the close of the Eesti Energia-initiated ENTRUM

programme to help lay the ground work for youth achievement

and enterprise. Over five years of activity, it has reached around

2,700 teenage Estonians. Ida-Viru County, Southern Estonia,

Western Estonia and Northern Estonia have carried out more

than 500 ideas in the field of social enterprise, technology, engi-

neering, oil shale and energy, ecological and creative industries. In

the last year of activity, the youth programme was carried out in

Ida-Viru County once again.

Ida-Viru County Talented Youth Energy Fund

In 2015, Eesti Energia supported a total of 29 school-age chil-

dren (7-18-year-olds) through the Ida-Viru County Talented

Youth Energy Fund. The Energy Fund was founded by Eesti

Energia in cooperation with the Ida-Viru County Association

of Municipalities and its goal is to promote the development of

youth recreational activity. In 2015, the volume of Energy Fund

totalled 9,000 euros. The most scholarships went to teens who

are engaged in science or sports. Youth achievement in music,

culture and art was also supported. The Energy Fund has been in

operation since 2013 and has provided scholarships to 93 teens

so far.

40

Knowledge-based development

The oil shale industry has kept pace with scientific progress. Esto-

nia has become one of the world leaders in oil shale excellence

thanks largely to its long-term research and strong cooperation

with research institutes and the energy industry.

Estonia’s first oil shale related knowhow export project started

10 years ago when Estonian geologists were invited to Jordan to

study the oil shale resource. Today Eesti Energia is developing a

554 MW oil shale power plant in Jordan. In 2015, the project’s

focus was on financing activities.

Supporting innovation and knowledge export

THE MOST IMPORTANT GENERAL ANALYSES

Research and development activity Implemented by Financed by

Analysis of the criteria for assessing oil shale reservesTallinn University of Technology

SA Keskkonnainvesteeringute Keskus (Environmental investment Centre)

Analysis of possibilities to use mining technologies involving filling; economic and environmental requirements in implementing the technology

Tallinn University of Technology

SA Keskkonnainvesteeringute Keskus

REFORM AFFECTING STANDARDS IN THE OIL SHALE SECTOR

The Oil Shale Competence Centre at the Tallinn University of Technology’s Virumaa College started organizing standardization of the oil shale sector in 2015 in cooperation with the Estonian Centre for Standardization. An Oil Shale and Oil Shale Products Processing Committee (EVS/TK 57) was founded, aimed at determining the need for standardization in the field and update the valid standards, share best practices with recognized experts and develop international cooperation. Participating in the work of the technical committee provides an opportunity to familiarize oneself with the working documents of the international technical committees, make suggestions, participate in the process of developing the international standards and thus contribute to the development of the field.

Cooperation with scientists

Oil shale energy is a strategic field for the Estonian state. Devel-

opment and environmental activities are based on scientific

research. In 2015, Estonian oil shale companies invested EUR 8.6

million into research in the field.

The oil shale industry invested EUR 8.6 million into research in the field

41

Research and development activity Commissioned by Implemented by Financed by

Mapping the properties of mine waste in Estonia and scientific research into enhancing the value of weak stone material

Road AdministrationAS Teede Tehnokeskus, Tallinn University of Technology (TUT) Virumaa College

Developing digital modelling methods for plateau deposits, hydro geological modelling, stability of earth’s crust, geotechnology

TUTMinistry of the Environment and Estonian Research Fund

Solution of thermal technology and environmental problems related to operation of oil shale power plants

TUTEesti Energia Narva Elektrijaamad AS

North-Estonian mining cave-ins – establishing and identifying them and causes

TUTSA Eesti Teadusfond (Estonian Research Fund)

Assessing the stability of areas where oil shale has been mined underground

TUTSA Keskkonnainvesteeringute Keskus

Determining heavy metals, permanent pollutants and fine particles in thermal processing of oil shale

Ministry of the Environment


Recovery of secondary polymer waste and oil shale ash as a raw input for construction materials . Composite peat-based material with pretensioned polymer rebar

University of TartuSA Keskkonnainvesteeringute Keskus

Study examining recovery of ash generated in the process of solid heat carrier process in the oil shale industry

TUTSA Keskkonnainvesteeringute Keskus

Use of granulated oil shale fluidised bed boiler ash as a soil improvement product - leachate study

institute of Chemical and Biological Physics


Granulating the fluidized bed boiler ash from Narva power plants, synthesis of sorbent and use for treating waste water .

institute of Chemical and Biological Physics


Research study entitled “Description of best available technology for combustion of oil shale gases originating from the Estonian shale oil industry”

Ministry of the Environment


THE MOST IMPORTANT SPECIFIC RESEARCH STUDIES

42

An oil shale visitor centre unique in Europe

In spring 2015, the Estonian Mining Museum was opened in an

old oil shale sorting plant, getting new life as a thematic centre

for oil shale that is unique in Europe. The plant provided work for

100 people in the 1930s and now it is the home of exciting exhibit

items, many of which were donated by industrial enterprises. Visi-

tors to the exhibition, which is supported by Eesti Energia, can

learn through activities and play about mining, generation of elec-

tricity and production of liquid fuels as well as renewable and oil

shale energy.

In addition to covering the history of industry and modern tech-

nologies, the Estonian Mining Museum has an important role as

a community centre. The museum is a popular place for holding

events. For example, a major regional event held there in 2015 was

Miners Day. The Mining Museum is an important tourist attrac-

tion in Ida-Viru County and a major destination for visitors on

the national level as well. This is attested to by the fact that the

museum was chosen as the most attractive tourism site in north-

ern Estonia in 2015.

Closer to the community

In 2015, KKT laid major emphasis on stimulating and improving

local life. The company held a spring community clean-up action

day in Kiviõli and an autumn community activity day as well,

where the city’s parks and greenspace around factories were tidied

up. KKT also provided support for the Kiviõli city festival and an

end-of-summer celebration.

For the first time, the Black Nights Film Festival came to Kiviõli

thanks to an invitation from KKT. Quality feature films were

screened on two November evenings at Kiviõli Secondary School

No. 1.

Giving back to the community

Estonian Mining Museum, which opened in 2015, was chosen as the most attractive

tourism site in northern Estonia in 2015

43

A SELECTION OF EVENTS IN THE OIL SHALE SECTOR IN 2015

FEBRUARY

VKG Elektrivõrgud holds the opening ceremony for a 8 MW power sub-station on the territory of the Narva logistics and industrial park.

APRIL

The Estonian Mining Museum is opened on 11 April in an old oil shale enrichment plant – it is an oil shale visitor centre that is one of a kind in Europe.

MAY

Eesti Energia’s Auvere power plant generates its first power.

VKG opens the second desulphuriza-tion system on the Kohtla-Järve pro-duction territory; it removes sulphur from smoke gases produced in the course of heat and power generation.

A photo album celebrating Ida-Viru County scenery is published, based on a photography competition supported by VKG and Eesti Energia.

JUNE

Eesti Energia decides to close energy units nos. 9 and 10 at Balti Power Plant, built in 1967 and now outdated.

Parliament passes an act allowing a more flexible approach to mining of oil shale.

AUGUST

A major event – Miners Day – is held at the Estonian Mining Museum, drawing 10,000 participants; the country’s best miners are recognized as well.

VKG Energia’s Põhja thermal power plant’s power generation complex is launched. It took almost three years to expand it and features a new turbo sys-tem, substation and renovated boiler.

OCTOBER

The first conference on Estonia’s strate-gic natural resources is held, “Good master for common wealth”.

NOVEMBER

The 7th oil shale conference is held, entitled “Oil shale and enterprise – challenges and opportunities”.

VKG’s third Petroter technology-powered oil shale processing plant is opened with Estonian Minister of Economic Affairs and Infrastructure Kristen Michal attending.

DECEMBER

The government approves and sends to Parliament the national develop-ment plan for use of oil shale for 2016-2030, which sets forth the principles and directions for the development in this field for the next 15 years.

KKT’s first solid heat carrier reactor starts operating at full capacity.

46


Use of oil shale

-7%The market price of electricity

-17%The average oil price

-44%

In comparison with 2014


120million


199million


82million

Sales revenueEUR

669million

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